What is Transition to Retirement?
Who qualifies for a TTR strategy?
Anyone* who’s considering retirement and has reached their preservation age can access their super savings and qualify to use a TTR strategy.
*temporary residents can’t access a TTR pension
Find your preservation age:
| Date of birth | Preservation age |
|---|---|
| Before 1 July 1960 | 55 |
| 1 July 1960 - 30 June 1961 | 56 |
| 1 July 1961 - 30 June 1962 | 57 |
| 1 July 1962 - 30 June 1963 | 58 |
| 1 July 1963 - 30 June 1964 | 59 |
| After 30 June 1964 | 60 |
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If you’re a member of a defined benefit division, please ensure you get financial advice before pursuing a transition to retirement strategy, as this may have an impact on your final benefit amount. If you want to learn more, you can get simple advice over the phone or face to face. It’s included as a part of your membership so there’s no extra cost.
How does it work?
Case study: salary sacrifice
If you earned $100 a week, were over 60, and fell into the highest tax bracket, paying on average 45 cents in the dollar in tax, you would only receive $55 in your pay packet each week.
But if you sacrifice the $100 to super and replace this with income from a TTR income stream, the effect on the balance of your super account, excluding other factors, is an increase of $30 each week
| Regular salary | Salary sacrifice to super | |
|---|---|---|
| Gross pay | $100 | $100 |
| Tax | $45 (PAYG) | $15 (super contributions tax) |
| Net | $55 | $85 |
| Net overall benefit of salary sacrificing | $30 |
This is a very simplistic example and doesn’t take into account other factors such as the Medicare levy, other tax concessions, balance of super funds, fees, or a realistic level of income.
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Try not to focus too much on how the calculations are worked out. In this example you’ll see how the change to the salary sacrificed amount affects the super balance, tax payable, and taxable income. You will see that your age also makes a big difference to your overall benefit.
Note: this example assumes a total income of less than $250,000 p.a. Higher superannuation contributions tax applies to those earning more than $250,000 p.a. (including super).
The main benefits of a TTR strategy
- Maintain your current income level – allowing you to budget for your ongoing living and lifestyle expenses
- Maximise your savings for retirement by continuing to contribute to your super
- Potentially minimise your tax payable, particularly while you’re still working, which makes it easier to save
Other info you might be interested in
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The basics of retirement
It’s important to think about how far your super will stretch, and whether it will be able to provide you the lifestyle you want
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How to access your super in retirement
Choosing when and how you access your super in retirement is a really important decision, and everyone is different.
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The role of financial planning
Good financial advice can help you set goals and make confident and informed financial decisions, now and in the future.
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Learning Hub
Understand your super and the simple steps you can take to stay in control.
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If you want to learn more or need help with making a decision about your super, you can get simple advice over the phone or face to face. It’s included as a part of your membership so there’s no extra cost.